Your workers comp is expensive mostly because of your trade rate and your claims history. The other two drivers are how much payroll is rated at your trade rate and the state you work in. Who this is for: contractors and trade business owners who want to know which part of the bill is the problem before they try to fix it.
The short version
- Trade rates drive most of the bill. Illustrative roofing rates run $15 to $40 per $100 of payroll, office work $0.20 to $0.50.
- A claims multiplier above 1.00 adds that percentage to the whole bill. A 1.25 means you pay 25 percent more than average.
- A past year-end payroll check may have moved payroll into a higher category or added uninsured subcontractors, and this year's estimate followed.
- Where you work matters. Some states cost far more than others for the same trade, and four states sell workers comp only through a state fund.
- Every one has a fix. Some take a phone call; the multiplier takes about three years.
What decides the price of my workers comp?
In most states your price is payroll times a rate for each job category, times your claims multiplier, plus discounts, a flat policy fee, and the extra charges your state adds. North Dakota, Ohio, Washington, and Wyoming run their own state fund and price differently, and Washington charges by hours worked instead of payroll. Here is what moves each part.
| Driver | What it does to the bill | How fast it can change |
|---|---|---|
| Trade rate | Sets the starting price per $100 of payroll. On the illustrative rates below, roofing runs many times the office rate. | Only when payroll moves to the right category |
| Payroll | More payroll, more premium. Uninsured subs and owner pay can be added to it. | With evidence, or at the audit |
| Claims multiplier | 1.00 is average. 1.30 adds 30 percent to the whole bill. | Three years of claims history |
Why is my trade rate so high?
Rates follow injuries. Falls from roofs and ladders produce the most expensive claims in construction, so roofing and framing sit near the top of the rate table. The ranges below are illustrative; your state, insurer, and claims history set the real number.
| Job category | Illustrative rate per $100 of payroll | Premium on $50,000 of payroll |
|---|---|---|
| Roofing | $15 to $40 | $7,500 to $20,000 |
| Framing carpentry | $6 to $12 | $3,000 to $6,000 |
| Plumbing and heating and cooling | $4 to $9 | $2,000 to $4,500 |
| Electrical | $3.50 to $7 | $1,750 to $3,500 |
| Office work (code 8810) | $0.20 to $0.50 | $100 to $250 |
If your whole payroll is rated at one trade, ask whether it should be. Most construction categories allow one employee's payroll to be split by the hours worked in each, if your payroll records prove it. See how much workers comp costs per employee.
Is my claims history making it worse?
The mod compares your claims over three years with what a business of your size and trade is expected to have. Below 1.00 you get a discount. Above 1.00 you pay a surcharge on the whole bill. Frequent small claims hurt more than one large one. If your mod is 1.30, nearly a quarter of your bill is claims history, and shopping cannot remove it. See what an experience mod is and how to lower it.
Did last year's year-end payroll check raise this year's bill?
After each policy year the insurer checks your real payroll (the premium audit). If it found more payroll than estimated, subs without proof, or employees moved into a higher category, two things happened. You got an extra bill for last year, and the insurer used the higher numbers as this year's estimate. Read understanding your premium audit.
Does my state make workers comp more expensive?
Yes. In North Dakota, Ohio, Washington, and Wyoming there is no private market at all. You buy from the state fund. In another group, including Massachusetts, New Jersey, Florida, Indiana, North Carolina, and Wisconsin, every insurer charges the same approved base rate, so savings come from approved credits, dividend plans, and payment terms. In the rest, insurers file their own rates, so quotes vary. Texas is different again: workers comp is optional there for most private employers. Our state guides, such as workers comp in Massachusetts, cover the local rules.
Am I paying for payroll that should not count?
- Office staff at the field rate. An employee in a walled off office who does office work only belongs in the office category.
- Your own pay. In most states an owner can file to be excluded, which removes their payroll and their coverage.
- Overtime. In most states the extra half of time-and-a-half pay does not count, if your payroll records show it separately.
- Insured subcontractors. A sub who gave you proof of workers comp is not your payroll. A sub who did not usually is.
A broker can check all four in one review of your policy and last audit. See the workers comp overview.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A framing contractor in Florida has $400,000 of payroll and a claims multiplier of 1.32 after three claims in two years. For this illustration the framing rate is $10 per $100.
What went wrong: The base premium is $40,000. The 1.32 multiplier lifts it to $52,800. A competitor with the same payroll and a 0.90 multiplier pays about $36,000. The owner asked for quotes, but every quote came back within a few hundred dollars.
What it cost: Illustrative math: the multiplier alone cost $12,800 a year over an average business, and $16,800 over the competitor. Shopping could not remove it.
The fix: The broker found $70,000 of the payroll belonged to a bookkeeper and an office manager who work in a walled off front office and never go to a job site, which cut the base premium by about $6,700. The estimator stayed at the framing rate, because visiting job sites takes an employee out of the office category.
Frequently asked questions
Q: Why is my workers comp insurance so expensive?
Usually your trade rate, a claims multiplier above 1.00, payroll counted at the wrong rate, or your state. The trade rate is fixed, but the other three can often be changed.
Q: Why does a roofer pay so much more than an electrician?
Rates follow injury costs. Falls from height produce the most expensive claims in construction, so roofing rates run several times the electrical rate for the same payroll.
Q: Is my price high because I am a new business?
Partly, maybe. A new business has no claims multiplier at all, so it is priced as if the multiplier were 1.00, which is average. You only get a real multiplier once your premium is large enough for your state to issue one.
Q: Why did my bill go up when I had no claims this year?
Your payroll may have grown, your state's rates may have changed, or an older claim moved into the three-year window used for your multiplier. A past audit can also raise the estimate.
Q: Will paying my crew as 1099 contractors make workers comp cheaper?
Usually not, and it can cost you more. At the year-end check, anyone you paid who did not carry their own workers comp is often added to your payroll, rated at the category for the work they did. Several states treat construction workers as employees whatever the paperwork says, so calling a real employee a 1099 contractor can bring state penalties too.
Q: How long until a bad claims year stops costing me?
About three years. Each year of claims sits in the multiplier for three years, so a bad year keeps raising your price until it ages out.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Breaking a contractor's workers comp bill into its parts, and showing which ones can be changed, is a review we do every week.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.